4 – Olive Stores – The purchase process

| 17th October 2015 | 0 Comments

The Purchase Process

Olive Stores, Brenchley, Kent TN12 7NQ

No 4 in series

No 1 in this series dealt with “How I found my development opportunity” , No2 explained “How to negotiate the purchase” and No 3 dealt with ” the design and planning”

Now we come to “The purchase process”.

Once the purchase has been agreed, the actual buying the property should be the easiest part of any development. There is a process to follow and once all the ‘ducks are in a row’ and all enquiries have been answered to your solicitors satisfaction the purchase can complete.

However…..

…. not all purchases are equal.

As mentioned in No 1 of the series I had agreed a price with a delayed completion for a fee. I needed to move to exchange of contracts quickly to keep the seller happy. I engaged a Commercial solicitor due to the commercial nature of the property and the ball started rolling.

The first cause for concern raised by the solicitor was that the seller purchased the property from a “Law of Property Act” administrator/receiver vi an auction and only received a Limited Title Guarantee.

This meant that the administrator had limited the extent of his liability as regards the extent and nature of the title which was offered to the buyer. My seller was similarly offering only a Limited Title Guarantee.

My solicitor was worried that when I came to sell I would be exposed to risk as I would be expected to provide any buyer or lender with a Full Title Guarantee.

The second issue was that because the property was purchased from an administrator receiver no responses to enquiries as to any issues relating to the property were offered to the buyer. As a consequence the sellers declined to respond to any of the standard enquiries which I would expect to be answered on the sale and purchase of a property of this type and nature.

These initial issues did cause concern but after discussion and some detective work I was able to establish Rights of Water, Drainage and Services plus Rights of Way across the drive and down the passage to the rear. It was also discovered that there were rights associated with two parking spaces on the neighbours drive.

The solicitor gave me hope that once I had owned the property for the year it would take for the development I would be able to answer the enquiries and provide enough information to provide Full Title Guarantee. This is in fact what transpired. Please read the article “How to sell a Property Development”

Now this is where I made what could have been a catastrophic error of judgement.

My Solicitor had pointed out that in the TP1 document (Transfer of Part of a Registered Title) as well as details as to the parking arrangements there was a restrictive covenant that stated I would need to obtain written agreement from the Neighbours to the rear for any development to the rear elevation of the property. This was where I was proposing to build a triple Gable Extension!!!

I met the neighbours and showed them my plans over a nice cup of coffee at their Kitchen Table. They took a good look and said they were happy with my proposal. That was good enough for me. I believed that they would provide written agreement when asked. WRONG! WRONG!! WRONG!!!

We exchanged contracts early January, the planning application was submitted and I waited.

The council received many letters of support from the village including a letter from the neighbours to the rear who voiced their approval.

Soon after however they changed their position and lodged an objection as, after some thought, they now felt the proposed extension was too close to their house. (This is what prompted the change to the design as mentioned in “How to obtain Planning Permission for a Development”.)

Before I go any further I need to say that the neighbours had a point. If I was to build the extension I was going to need to listen to what they wanted as far as the design was concerned and also provide them with some additional items which included:

  • New blinds for their conservatory roof so they wouldn’t be overlooked
  • Resurface the driveway – I was going to do this anyway
  • Provide a new Oak Gate for the drive. – It needed one anyway

If I promised to provide these they would agree to the development and release me from the obligations of the covenant.

PHEW! PHEW!! PHEW!!!

This was a small price to pay.

Note to self – obtain agreement BEFORE committing to a purchase.

OK..to sum up…..

In basic terms what you need to establish before buying a property is:

  • Identify that what you think you are buying is what you actually are buying by checking the title plan. Does the plan reflect what is actually there?
  • Establish who is responsible for which boundary.
  • Deal with any restrictions on the title, including restrictive covenants as above, BEFORE you commit to the purchase by exchanging contracts.
  • Establish Access. Do you have vehicular and pedestrian rights of way to your parking spaces and front, side and rear doors? I bought Crouch Cottage (See previous Projects) but only after the sellers ensured that the Ransom Strip that they had omitted to purchase when they bought the property was included.
  • Establish rights regarding Water supply, Drainage and Services (Gas, Electric, BT, Satellite, Cable)

Once you have all this you will have Full Title Guarantee which you will be able to pass on to any buyer in the future.

Completion of the Purchase

As you will know from reading no 2 in this series “How to Design and Obtain Planning Permission for a Development” I obtained planning permission on the 29th of April. The deal was that I would need to complete the purchase by the 1st of May. If I didn’t I would default………..I therefore only had 2 days to receive the facility from the Lender, sign, provide all the guarantees, draw down the funds and complete the purchase…… Not enough time….I needed to ask the seller for a week’s extension. I was relying on his generosity which you never want to do.

I thought 3 months plus a 1 month extension would be enough time to get planning and funding but little did I know that there would be so many delays. Risky stuff.

The seller agreed to a 2 week extension for a further fee of £1,000 plus £1,000 per week (he was doing alright wasn’t he!!) but I needed to pay the £1,000 x 4 weeks that I had already gone over there and then.

I had to agree so paid up. I hate being put in that sort of position but you take the risks you eat the pie.

Completion took place on the 9th of May. Hooray…champagne corks a popping and anxiety levels reducing………considerably!!

I couldn’t delay any further and was on site starting the soft strip on the 12th of May with my 3 trusty labourers.

 

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Category: My Projects, Negotiating and Buying a Property, Olive Stores - Brenchley, Property Developing, Property Professionals

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